Japan's Nikkei 225 was down 1.1% with Australia's S&P/ASX 200 off 0.7% and New Zealand's NZX-50 down 1.6%, though South Korea's Kospi Composite had erased an early fall to be flat; there was liable to be some caution before a U.S. holiday Monday, with overall market volume low.

Risk aversion related to the Japanese fourth quarter GDP data was being felt in the currency market with the yen - viewed as something of a safe-haven - up versus the euro and U.S. dollar.

GDP contracted 3.3% on the quarter, more than the 3.1% forecast in a Dow Jones Newswires poll; it declined 12.7% on an annualized basis. The double-digit drop marked the economy's third straight quarter of shrinkage, and was the fastest contraction since January-March 1974.

"It will likely be another tough week for Japanese stocks," said Tachibana Securities operating officer Kenichi Hirano. The data "contained no (major) surprises but surely don't help market sentiment," added Yukio Takahashi, an analyst at Shinko Securities.

There was some support for stocks from local media reports the Japanese government and ruling parties would draw up additional large-scale economic measures that could require up to 20 trillion yen in fiscal spending; the GDP data "could be a tailwind for the government to formulate a supplementary budget," said UBS senior economist Akira Maekawa.

But there was also some disappointment that a meeting of finance ministers from the Group of Seven industrialized nations failed to come up with detailed actions to support the global economy. "The verdict on the G7 is likely to be one of frustration over the lack of action. It would have been reassuring to hear something concrete, for example over a coordinated toxic bank," said GFT head of derivatives Martin Slaney.

Real estate and shipping stocks were falling in Tokyo with Nippon Yusen down 1.1%, Mitsui O.S.K. Lines down 1.8% and Mitsui Fudosan lower by 1.9%.

In Sydney, Rio Tinto shares fell 2.1% amid media reports of some shareholder resistance to its deal with Chinalco.

Global logistics firm Brambles fell 7.0% after saying net profit for the six months to Dec. 31 fell 28% to US$212.8 million from a year ago, while SP Ausnet sank 9.7% after it acknowledged a report in The Age newspaper that it faced a class action over the recent bushfires in Victoria.

Some traders in Sydney were hoping for support in the near term from the expected release by President Barack Obama of a plan to support the mortgage industry in the U.S. "It may prove to be a smart move in six to nine months if main street gets propped up," said BBY senior trader Peter Copeland.

Home appliance manufacturer Fisher and Paykel Appliance's profit warning for the full year (it also said it was reviewing capital-raising options) sent shivers through the New Zealand market; "it highlights how tough the world has become in the last three months and how balance sheets are the order of the day, not earnings," said First NZ Capital broker James Lees.

In Seoul, steelmakers were lower with Posco off 1.7% and Hyundai Steel down 2.3%, though the overall market was helped by ongoing hopes for further action by Beijing to shore up the Chinese economy; China is a big buyer of Korean goods.

In currency trade the U.S. dollar was down at Y91.45, from Y91.90 late in New York on Friday, with the euro at $1.2765, from $1.2888 and at Y116.95, from Y118.40.

The euro weakness followed fourth quarter data from the euro-zone on Friday showing the region suffered its sharpest contraction in GDP since records began in 1995.

BNZ strategist Danica Hampton expected risk appetite and stocks to remain the key driver for the currency market this week; "while the new U.S. stimulus package has the potential to inject some optimism into markets we suspect this will be overshadowed by fears about the eastern European financial sector and worries that Ireland may default on its debt."

The G7 statement meanwhile held little that was new for currencies, repeating the usual comment that excess volatility was undesirable, though it did welcome China's efforts to promote growth.

Japanese government bonds were falling, with the talk of greater government stimulus raising the chance of more debt issuance; lead March futures were down at 139.11, from 139.36 Friday.

Spot gold was down $3.10 from New York, at $938.50 a troy ounce. March Nymex crude oil futures were 22 cents higher at $37.73 a barrel on Globex, adding to a 10.4% rally in New York which came before the U.S. long weekend.

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